Billed before cedit card is activated? ID theft danger!


Opening Credits
Columnist Erica Sandberg
Erica Sandberg is a prominent personal finance authority and author of "Expecting Money: The Essential Financial Plan for New and Growing Families." She writes "Opening Credits," a weekly reader Q&A column about issues for people who are new to credit, for

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Question Dear Opening Credits,
A friend of mine applied for a credit card. They received their first bill before they received and activated the card. At this time, they still don't have the card. Is it legit for a credit card company to send the bill prior to receiving and activating the card? -- Duane 

Answer Dear Duane,
Your friend needs to contact his credit card company right away. Something is wrong and if he doesn't act quickly, his troubles could intensify.

It is normal for a creditor to send a new customer a welcome letter that spells out the terms of the account, and include the credit card ready to activate with a phone call. Just a bill, however, would indicate that the notice had already been mailed and that someone else has gotten ahold of it. Whoever it was, they activated the card, then used it. The credit issuer then sent a statement outlining what was purchased, as well as the balance and minimum amount due: aka, the bill. 

Thankfully the remedy is fairly easy. As I mentioned, your friend must call the issuer to ask for the date that the account was activated, where the charges were made and what the current debt is. The thief could certainly have used the card after the bill was sent out, so the current balance could be greater than what is listed.

After obtaining that information, he can explain to the representative that he did not make or authorize any of the charges. Most likely he will be transferred to a person working for the company's fraud department, who will walk him through the steps necessary to close this card and then open one with a new account number. 

If the credit issuer does not instruct him to file a police report, he should do so anyway. He will then have a police report number that he may need for future identity theft protection.

Your friend should contact one of the credit reporting agencies to place a fraud alert on his file. If the crook tries to increase the credit limit to charge even more or apply for a new account to steal, the creditor will have to verify his identity -- otherwise, the request will be denied. 

This alert remains intact for 90 days, but if he wants to extend it or place a freeze (which is an even stricter alert that makes his credit history inaccessible), he'll need to provide the police report number to the agency.

As I mentioned, though, time is of the essence. According to the Fair Credit Billing Act, cardholders are not held responsible for any unauthorized charges if the crime is reported within 60 days after the statement was mailed. So if your friend waits too long, he could be liable for all or a portion of the debt. Mind that many credit issuers give their customers greater consumer protection than the law stipulates. 

For an increased security measure, I urge that your friend request all future statements be sent to him online rather than mailed, and to review the activity frequently. He should also check his credit reports once per quarter, at least in the first year after fraud is suspected. He can access them for free from What to look for? Hard inquiries for loans and credit cards, mysterious accounts and unusually high balances.

Oh, and you're a good man to gather and disseminate such information for a pal!

See related: Is a card account open if it isn't activated?, 4 ways crooks cash in on your personal and financial data

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Published: May 28, 2014

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Updated: 10-25-2016

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